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May 10, 2010
Bank of Japan

Introduction of US Dollar Funds-Supplying
Operations against Pooled Collateral

At the Monetary Policy Meeting held today, the Policy Board of the Bank of
Japan decided, in view of recent liquidity pressures in the international
financial markets and the possible impact of those on liquidity in the Yen
money market, to take following measures with the aim of further facilitating
money market operations and maintaining the smooth functioning of the
money market as well as ensuring stability in financial markets.

1. The Bank shall introduce U.S. dollar funds-supplying operations
against pooled collateral.

See the attachment 1 for the newly

established “Principal Terms and Conditions for US Dollar
Funds-Supplying Operations against Pooled Collateral.”

2. The Bank shall enter into a U.S. Dollar-Yen Swap Agreement with
the Federal Reserve Bank of New York.
the summary of the agreement.

See the attachment 2 for

Attachment 1

Principal Terms and Conditions for U.S. Dollar Funds-Supplying Operations
against Pooled Collateral

1. Purpose
These Terms and Conditions prescribe the principles for the Bank of Japan's
U.S. Dollar (USD) funds-supplying operations against pooled collateral (USD
denominated loans that are made against pooled eligible collateral by way of
open market operations) introduced with the aim of further facilitating money
market operations and maintaining the smooth functioning of the money
market as well as ensuring stability in financial markets in view of recent
liquidity pressures in the international financial markets and the possible
impact of those on liquidity in the Yen money market.
2. Location of Operations
At the Head Office (International Department) of the Bank.
3. Eligible Counterparties
Eligible counterparties shall, pursuant to the Bank's relevant rules, be
selected from financial institutions (as defined in Article 37, Paragraph 1 of the
Bank of Japan Law, Law No.89, 1997, excluding the Resolution and
Collection Corporation and bridge banks [as defined in Article 2, Paragraph 13
of the Deposit Insurance Law, Law No.34, 1971]), financial instruments firms
(Article 10, Paragraph 1, Clause 2 of the Bank of Japan Law Enforcement
Order [Order No. 385 of 1997]) that conduct the first financial instruments
business (Article 28, Paragraph 1 of the Financial Instruments and Exchange
Law, Law No. 25, 1948), securities finance companies (Article 10, Paragraph
1, Clause 3 of the Order), and tanshi companies (Article 10, Paragraph 1,
Clause 4 of the Order).
4. Form of Loans
Loans shall be provided in the form of electronic lending.
5. Duration of Loans
Taking account of conditions in financial markets, the Bank shall determine
the duration of each loan and the duration shall not exceed three months.

6. Loan Rates and Collection of Interest
(1) Interest rates on the loans
Interest rates shall be determined by one of the following methods.

(a) Interest rates on the loans shall be determined by multiple-rate
competitive auctions. The rate shall not fall below the rate set by the
Federal Reserve Bank of New York (FRBNY) as a prevailing USD
Overnight Indexed Swap market rate that corresponds to the duration
of the loan.
(b) Interest rates on the loans shall be set by the Federal Reserve Bank
of New York taking account of a prevailing USD Overnight Indexed
Swap market rate that corresponds to the duration of the loan.
(2) Collection of interest
The interest on a loan shall be calculated based on the rate determined by
the method described in (1) for the number of days from the first day after
the disbursement of the loan up to the maturity date, and the interest shall
be collected after the loan reaches maturity.
7. Date of Loan Disbursement, Amount of Loans, etc.
Taking account of conditions in financial markets, the Bank shall
determine specifications necessary for lending, including the date of loan
disbursement, the amount, and the counterparties for each loan.
8. Collateral
(1) The standing pool of eligible collateral pledged by an eligible counterparty
to the Bank shall secure the loans made to the counterparty.
(2) "Guidelines on Eligible Collateral" (Policy Board Decision on October
13, 2000) and "Collateral Guidelines on Eligible Foreign Bonds" (Policy
Board Decision on May 22, 2009) shall apply to the collateral for the
loans.
(3) The Yen denominated amount for which the counterparty shall pledge
eligible collateral shall be obtained by multiplying a yen-denominated loan
value based on the USD/Yen spot exchange rate prevailing in the market
by 1.13 for the loan with a duration of up to one month and by 1.25 for the
loan with a duration of more than one month and up to three months
respectively.
9. Settlement
The payment and receipt of USD between the Bank and the counterparties

shall be made through the accounts at the FRBNY which each party shall
specify in advance.

(Supplementary Provision)
These terms and conditions shall become effective today and shall be valid
until January 31, 2011. To the loans that are disbursed on or before January
31, 2011, these terms and conditions shall be applied until the maturity of the
loans.

Attachment 2

Summary of a U.S. Dollar-Yen Swap Agreement with the Federal Reserve
Bank of New York

1. Purpose
To obtain U.S. Dollar(USD), which is to be provided to financial institutions for
the time being by the Bank of Japan(BoJ), to maintain the smooth functioning
of the money market and ensure stability in financial markets.
2. Parties
Federal Reserve Bank of New York(FRBNY) and BoJ
3. Transactions
BoJ sells Yen to the FRBNY to purchase USD from the FRBNY by means of a
spot transaction, with a simultaneous agreement by BoJ to sell USD to the
FRBNY and to purchase Yen from the FRBNY on the maturity date of such
swap transaction by means of a forward transaction.
4. End of Drawing Period
January 31, 2011
5. Maximum aggregate amount
Unlimited